Calculating overtime and PTO correctly is essential to maintain employee satisfaction, comply with the Fair Labor Standards Act (FLSA), and avoid hefty penalties. This guide explains the step-by-step process for calculating overtime and PTO under the FLSA and how Accu Data payroll processing services help businesses avoid these pitfalls by keeping them up to date with payroll regulations and best practices.

With updated overtime regulations released by the Department of Labor (DOL), employers must ensure accurate pay for non-exempt employees working over 40 hours per week.

Over the last few years, the number of Fair Labor Standards Act (FLSA) claims filed for U.S. business overtime violations has risen, with penalties of up to “$1,000 per violation (and more than double that for repeat offenders).

It’s not that companies are looking to cheat their workers. The fact is the payroll and HR landscape is constantly evolving, and keeping track of all the new rules and regulations can be both time consuming and exhausting to HR teams.

Calculating Overtime

In April 2024, the U.S. Department of Labor (DOL) released its Overtime Final Rule, updating its overtime protections for non-exempt employees. Under the FLSA, employers must pay overtime to those who work more than 40 hours in a week.

Many business owners believe their workers can waive the right to overtime or that they pay their regular hourly rate for time worked beyond 40 hours. This is incorrect. Non-exempt employees must be paid at least 1.5 times their hourly wage once overtime kicks in.

It’s important to note that overtime calculations can vary by state. For example, in California, employees are entitled to overtime pay after working more than 8 hours in a single workday, not just over 40 hours in a week. This means employers need to be aware of both federal and state-specific overtime regulations to ensure full compliance.

How to Calculate Paid Time Off (PTO) Accurately

Tracking your employees’ paid time off (vacation, sick leave, etc.) is a tedious process when done manually and can often lead to errors. And as we know, discrepancies in payroll can lead to staff turnover if it happens enough times.

It’s imperative that your records be complete and compliant with the regulations of the state.

Beyond state rules, you should be tracking each worker’s PTO, and increasing and adjusting it based on their time with the company or other considerations.

You do this not only to ensure accurate recordkeeping, but also to report for expense purposes and to provide proof to your employees.

Having an automated accrual and recording system in place eliminates human errors, housing all information digitally, and allowing information on hours and time off to be interfaced with a reporting system.

We’re Here to Help!

Accu Data has extensive experience in payroll processing and can help keep your business efficient and compliant (with OT, PTO, and beyond)! We pride ourselves on staying at the forefront of technology while providing one-to-one personal service for 40 years. Contact Accu Data today for a free consultation.